Large Speculators Hold Record Long Positions in Corn and Soybeans

Corn and soybean markets are consolidating as they await the outcome of the US-China Summit, which is scheduled to take place on September 24. According to Jerry Gulke, president of the Gulke Group, large speculators have been adding to their net long positions in corn and soybeans since July 6, as shown by the latest CFTC Commitment of Traders report.

This has allowed the Relative Strength Index (RSI) to decrease from 85 to 62 in corn and soybeans. Gulke notes that large speculators tend to be ahead of the trend or market, buying before it moves up or selling before it goes down.

While some analysts believe that once large speculators reach a record long position, they are more likely to liquidate than add to their length, Gulke thinks that funds could stay long in corn and soybeans for a while. He also notes that the market can move sideways to fix its overbought status, allowing large speculators to stay long until the market resumes its uptrend.

Gulke advises farmers to protect themselves by hedging their positions at current levels, as he believes there is risk of soybean prices going lower due to increasing supplies in future USDA reports. He recommends staying with hedge positions until they take out last week's highs or the high made when Pro Farmer numbers came out.